KINDS OF COMAPANIES

KINDS OF COMAPANIESKINDS OF COMAPANIES

DEFINITION OF COMPANYDEFINITION OF COMPANY

According to Companies Act ,” a company formed and registered under this Act or an existing companies”.

According to Chief Justice Marshall ,“ a company is a person , artificial , invisible , intangible and existing only in the contemplation of law. Being a mere creation of Law,it possesses only those properties which the character of its creation confers upon it either expressly or as incidental to its very existence”.

Kinds of Kinds of CompaniesCompanies

Incorporated Unincorporated

Charted company

Statutory company

Registered company

Companies limited by shares

Companies limited by guarantee

Unlimited companies

Public Private Public PublicPrivate Private

CHARTERED COMPANIESCHARTERED COMPANIESA Monarch or King brings in such a company.

In earlier times, trading co. were created by the charter.

Provision of companies act 1956 do not apply.

These types of companies do not exist in India.

Examples of Chartered CompaniesExamples of Chartered Companies

Spanish Company (1577) Eastland Company (1579) Turkey Company (1581) Morocco Company (1588) East India Company (1600) German New Guinea Company

(1884) German East Africa Company

(1884)

Royal African Company (1672) Greenland Company (1693) South Sea Company (1711) British North Borneo Company

(1881) Royal Niger Company (1886)

STATUTORY COMPANIESSTATUTORY COMPANIESIncorporated by means of a special Act of parliament or any state legislature.

Carries out special public undertakings.

These are governed by act creating them.

Examples : Food Corp. of India , Life insurance of India , JKSRTC , JK Industries.

REGISTERED COMPANIESREGISTERED COMPANIESCompanies registered under companies Act, 1956 or existing companies.

Sec 12(2) provides the co. registered under this act may be:-

Companies limited by shares.

Companies limited by guarantee.

Unlimited companies.

COMPANIES LIMITED BY SHARESCOMPANIES LIMITED BY SHARES

Majority of registered Cos are limited by shares.

Such Cos must have share capital.

Liability of its members is limited to the amount of unpaid shares held by them.

There is no liability when shares are fully paid.

COMPANIES LIMITED BY GUARANTEECOMPANIES LIMITED BY GUARANTEE

Liability of members is limited to such amounts as they may respectively undertake by memorandum to contribute to the assets of the company.

May or may not have share capital.

If it has share capital, the liability of members is two fold.Liability to pay the share amount

The amount guaranteed

UNLIMITED COMPANIESUNLIMITED COMPANIES

Liability of members is unlimited.

Company may or may not have share capital.

Such companies are rarely formed.

These Cos must not incorporate “ltd.” word as the last word.

It must file the articles and memorandum.

An unlimited company can get itself re-registered as a limited liability company under section 32 of the Act .

PRIVATE COMPANIESPRIVATE COMPANIESPrivate Limited Company means a company formed with the word `private’ in its name. The Articles of Association of such companies includes the following restrictions :-

articles of association restricts the right to transfer its shares

limitation to the number of shareholders to 50 (excluding employees and former employees)

prohibition towards invitation to the public to subscribe to shares and debentures [Section 3(1)(iii)

The minimum paid up capital for a private company would be Rs. 100,000.

EXAMPLESEXAMPLES        Acer India Private Ltd.   L’Oreal India private Ltd.

Examples from J&K

J & K Metal wires Private Ltd.         Kashmir tourist bus service Private Ltd.

  NITCO Roadways Private Ltd.      Chinar Biscuits Private Ltd. JAY KAY Automobiles Private Ltd.        Delight fast food Private Ltd. J & K Vehicleades Private Ltd. J K Associates Private Ltd.

PUBLIC COMPANIESPUBLIC COMPANIESA company which is not a Private company.

The minimum paid up capital for a public company would be Rs. 500,000.

At least 7 persons are required to form a public company.

Only the shares of public companies are capable of being dealt in stock exchange.

EXAMPLESEXAMPLES

PUBLIC VS. PRIVATE COMPANIESPUBLIC VS. PRIVATE COMPANIES

Basis Public Private

Min. paid up capital 5 lakh 1 lakh

Min. of members 7 2

Max. of mem. No limit 50

Restriction On name Ltd. (P) ltd.

Commencement of business

A public co. shall not commence its buss.unless it has been granted certificate of commencement of business

A Pvt. Co. can commence its business as soon as it is incorporated

Invitation to public A public co. may invite public to subscribe to its shares by issuing prospectus.

A Pvt.co.cannot extend such invitation to the public

Transferability of shares No restriction on the transferability in case of public ltd. Co.

A Pvt. Co. by its articles must restrict the right to its members to transfer its shares

Basis Public Private

Share warrants A public co. can issue share warrants Such a right is denied to Pvt. Co.

Issue of capital A public co. proposing issue of shares must offers them to existing members

A Pvt. Co is free to allot new issue to outsiders

No. of directors A public co. must have at least 3 directors

A Pvt. Co. may have 2 directors

Statuary meetings A public co. must hold statuary meeting& file with the registrar a statuary report.

A Pvt. Co. has no such obligation

Quorum If the articles of the co. do not otherwise provide the quorum is 5mem. Personally present in the case of public co

The quorum of the of the Pvt. co. is 2 members Personally present

Restriction on the appointment of directors

A director of A public co. shall file with a registrar consent or act as such..He shall sign Memorandum and enter into contract for qualification shares . He cannot take part in the discussion on a contract in which he is interested.

These restriction do not apply to a Pvt. Co.

GOVERNMENT COMPANIES GOVERNMENT COMPANIES

Government Companies means any company in which more than 51% of the paid up share capital is held by the Central Government or any State Government or partly by the Central Government and partly by the one or more State Governments and includes a company which is a subsidiary of a government company.

Government Companies are also governed by the provisions of the Companies Act.

EXAMPLESEXAMPLES

Jammu & Kashmir State Agro Industries Ltd.

Jammu & Kashmir Bank Ltd.

Jammu & Kashmir Tourism development corpn Ltd.

Jammu and Kashmir Cement Ltd.

J&K Industrial & Technical Consultancy Organisation Ltd.

HOLDINGHOLDING ANDAND SUBSIDIARYSUBSIDIARY COMPANIESCOMPANIES

A company which controls other company is known as the holding company and the company so controlled is termed as subsidiary company.

Section 4 of the companies act, 1956, provides that a holding company is one if it :

Controls the board of directors of another company;or

Holds more than half of the nominal value of equity share capital of another company ; or

Is a subsidiary of any company which is in turn a subsidiary of another company.

EXAMPLESEXAMPLES      HOLDING COMPANY 

Indian Oil Corporation Ltd. SUBSIDIARIES        Indian Oil Technology Ltd.       Indian Oil (Mauritius) Ltd.      IBP Co Ltd.

        Indian Oil Blending Ltd.  HOLDING COMPANY Acer Co. Ltd

SUBSIDIARIES ·        Acer India private Ltd.·        Acer computer Australia. Pvt Ltd. ·        Acer Computer (Singapore) Pvt Ltd·        Acer Computer Co., Ltd.·        And many more 

FOREIGN COMPANIESFOREIGN COMPANIESCompany incorporated outside INDIA and having a place of business in India.

According to section 591, a foreign company is one incorporated outside India

a) which established a place of business within the India after the commencement of this act.

b) which had a place of business within India before the commencement of this act and continues to have the same at the commencement of this

act.

COMPANIES CONVERTED COMPANIES CONVERTED FROM PUBLIC LIMITED TO FROM PUBLIC LIMITED TO

PRIVATEPRIVATE    

COMPANIES CONVERTED FROM PUBLIC TO PRIVATECOMPANIES CONVERTED FROM PUBLIC TO PRIVATE

Name of the Company Date of Conversion NITCO ROADWAYS LTD. Friday, June 15, 2001

NEW STYLE FABRICATORS LTD Friday, April 19, 2002

TRANS ASIA HOTELS PVT LTD Wednesday, December 20, 2000

T.R.G. INDUSTRIES PRIVATE LTD Wednesday, April 04, 2001

P.B.I. (INDIA) LIMITED Wednesday, June 07, 2000

GANESH OIL MILLS LIMITED Thursday, September 27, 2001

APEXCEL LIMITED Friday, March 28, 2003

PATHANKOT VEHICLEADES PVT.LTD. Monday, March 11, 2002

KASHMIR FINANCE LIMITED Thursday, January 22, 2004

COMPANIES CONVERTED FROM PRIVATE TO COMPANIES CONVERTED FROM PRIVATE TO

PUBLIC LIMITEDPUBLIC LIMITED

Name of the Company

Date of Conversion

JAY KAY REAL ESTATES PRIVATE LIMITED

Wednesday,

September 05, 2001

SHEEN ROADLINKS PVT.LTD. Friday,

March 05, 1999

DUTTA FINANCIERS (INDIA) PVT.LTD.

Wednesday,

July 25, 2001

SHIROMANI FINANCE PVT LTD

Tuesday,

February 12, 2002

GTZ SECURITIES LIMITED Friday,

March 10, 2000

SRF INTERNATIONAL PRIVATE LIMITED

Monday,

March 24, 2003

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